Robinhood Employees Describe Belt-Tightening Ahead of Job Cuts

  • Robinhood laid off 23% of its staff on Tuesday after a first round of job cuts this April.
  • Former employees say they saw recent signs of belt-tightening, including plans to shrink office space.
  • On a quarterly earnings call, Robinhood execs said the company will not be acquired but is considering acquisitions.

It’s been a rough week for Robinhood.

On Tuesday, Robinhood was slapped with a $30 million fine levied by New York State’s financial regulator. Later that day, the company announced plans to lay off nearly a quarter of its roughly 3,500-strong workforce and reported lackluster second-quarter earnings. On Wednesday, a top executive, Chief Product Officer Aparna Chennapragada, announced her departure from the company.

While the second-round job cuts came as a shock to some, following a 9% workforce reduction just four months prior, insiders say they saw the signs.

For the employees of Robinhood, the disappointing financial figures — monthly average users fell by a third compared to 2021, for example — weren’t surprising. Nor were the layoffs themselves, which had been the key subject of the company’s rumor mill since this spring. That’s because in recent weeks, the startup had been sending signals warning of tough times ahead — from manager emails about an impending reorganization to the sight of prospective tenants from other companies touring Robinhood’s office space.

Now, morale among the 2,600 remaining employees is grim. And questions about the company’s future, from both insiders and the industry players, burn hotter than ever. Insider spoke to five former employees of Robinhood, all of whom asked to remain anonymous in order to protect their future employment opportunities. They described a company, one year on since its public debut, facing a slowing market and looking for any and all ways to cut costs — and a workforce on tenterhooks with no clear line of sight into when the downsizing might end.

“The company is hemorrhaging money, and it’s bad,” said one ex-employee, sharing his opinion of the company’s publicly-reported, quarterly financial figures. “I believe in the mission itself, but people cannot trust us ever since GameStop,” they said.

A Robinhood spokesperson declined to comment.

The layoffs

Axed Robinhood employees were taken back by the scale of Tuesday’s job cuts, which impacted 23% of the company’s headcount, or roughly 800 employees. The layoffs, which are expected to cost Robinhood as much as $60 million in severance and expenses, hit marketing, operations, and customer service divisions the hardest, with two offices in Tempe, Arizona, and Charlotte, North Carolina, being shuttered.

In a blog post announcing the cuts, Robinhood CEO and Cofounder Vlad Tenev wrote that the blame for the drastic downsizing lay squarely with him.

“As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me,” Tenev wrote, referring to staffers as “Robinhoodies” and “Hoodies.”

According to former employees, Tenev announced the layoffs on a brief, five- to 10-minute Zoom call with Robinhood’s workforce on Tuesday. He also announced the closure of offices in Tempe and Charlotte, and then echoed the message of Robinhood’s public blog post: The startup added headcount too quickly and wasn’t prepared for further weakness in the economy.

When the Zoom call was over, employees waited anxiously to see if they would be let go; Tenev had said staff would be notified via email and Slack immediately after the call.

“We all started trading contact information and phone numbers,” one former employee said. “After the announcement, we all just sat there refreshing our screens over and over to see if we were the ones to get the notification. The whole company froze for that 15 minutes waiting to see what happened to them.”

While Tenev’s blog post said that laid-off Robinhood staff would be offered the opportunity to stay with the company through October, some former employees said they lost access to Robinhood’s systems after the call on Tuesday and are no longer working for the company. It’s an understandable move, they added, given the brokerage’s access to sensitive client information.

Slumping morale

Morale at Robinhood has been on the decline since the company laid off 9% of its employees in April, the staff said.

“That was a ‘Come down to Earth’ moment for us,” one newly axed employee said. “For a lot of people, we were living in fantasy land.”

“People just weren’t the same, morale was down if you went into the office,” one of the laid-off staffers said. “I know this time around, morale is really going to be down. People who are still there are just like, ‘What the hell are we supposed to do now?'”

The employee added that in the weeks leading up to Tuesday’s mass layoffs, they had heard from their direct manager about a potential reorganization of their team. It was a prompt, this person said, to start applying for other jobs.

Another harbinger came in the weeks leading up to the layoffs when former employees saw representatives of other companies touring the Charlotte office, which Robinhood had opened in 2021, to potentially take over the space, they said.

“My mind went to one of two things: Either they’re getting rid of the Charlotte office or they’re just moving us to a smaller office space,” said one former Charlotte-based employee who worked in customer service. “There weren’t any communications about it, like ‘Hey, people might be coming to look in the office, don’t worry about it.’ They were walking through the office, grabbing water from our snack station, it was just very weird.”

Other ex-Robinhood staffers said the company had notified them in recent weeks that it planned to trim its footprint in the building from two floors to one, which they, too, found concerning.

In Arizona, meanwhile, one former employee based there who left the company in recent months told Insider that Robinhood had been looking to trim its footprint at a WeWork in downtown Tempe, which had opened in 2020.

With the company’s return-to-office being continually pushed back and only a handful of people coming into the office, “having an entire floor in what was an expensive building, they were probably bleeding money,” the Arizona-based former employee said. The employee estimated that roughly 200 Robinhood staffers were likely based in the Tempe office.

Uncertainty ahead

In his Tuesday blog, Tenev said that “additional deterioration of the macro environment” since April’s layoffs had left the brokerage in a weaker position than he had estimated.

But the economy hasn’t shown many signs of budging, and as Chief Financial Officer Jason Warnick pointed out on the company’s second-quarter earnings call: “The first half of the year has been about the worst that we’ve seen in about 50 years, hard to know exactly when it’s going to bottom out and turn around.”

“We saw Vlad talk about how this was a product of the macro environment. Rising interest rates, all that stuff, but that didn’t really change a whole lot from April until now,” the former Charlotte-based employee said. “The business didn’t feel in any better position than it was before so it felt inevitable from that standpoint,” they said of the layoffs.

On Wednesday, Chennapragada, the company’s chief product officer, announced on LinkedIn and Twitter that she would step down but stay on as an advisor to Tenev. Chennapragada, a former Google exec, joined Robinhood over a year ago in April 2021.

“The world has changed. As Robinhood adapts to this new context, it’s time for me to move on,” she penned in her post.

Meanwhile, Tenev was curiously optimistic on Robinhood’s earnings call on Wednesday. When questioned whether the company was up for being acquired — another rumor that’s floated around ever since Sam Bankman-Fried of crypto-exchange FTX took a 7.6% stake in the investing fintech company — Tenev said no, but that Robinhood itself was looking to make more acquisitions.

In April, weeks before the 9% workforce reduction, Robinhood announced the acquisition of crypto-asset firm Ziglu. Robinhood has roughly $6 billion in cash on its balance sheet, and the company has a $2.5 billion budget for acquisitions, Warnick said on the earnings call.

Robinhood’s stock peaked above $80 per share days after it went public last summer. The stock has since fallen more than 80% to roughly $10. Following the most recent layoff announcement, Robinhood’s stock jumped 15% Wednesday morning and then rose sharply again Thursday morning.

Are you an employee or former employee of Robinhood? Get in touch with our reporters: Asia Martin, Carter Johnsonand Bianca Chan.

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